The Federal Inland Revenue Service (FIRS) has issued new guidelines on the simplified compliance regime for value added tax (VAT) for non-resident suppliers (NRS). The guidelines amend, update or replace the contents of any other guidelines, circulars, notices or other publications previously issued by the FIRS. They were issued pursuant to the FIRS' powers under section 10 of the Value Added Tax (VAT) Act Cap. V1, LFN 2004 (as amended) and will take effect from 1 January 2022 with respect to the supply of services and intangibles, and from 1 January 2024 for goods.
Accordingly, the guidelines apply to supplies, through digital means, of goods, services, intangibles and other digital products made by persons not physically present, located or represented in Nigeria to businesses (business to business, B2B) or consumers (business to consumers, B2C) in Nigeria. They also apply to supplies made by natural persons, trusts, partnerships, corporations, companies and any other persons.
The guidelines further appoint NRS (that can be direct suppliers or intermediaries as the case may be) to collect VAT and remit this to the FIRS. The NRS and any intermediaries are also required to register for VAT on their behalf, issue VAT invoices, and collect and remit VAT due. In addition, resident consumers to whom supplies of taxable goods or services are made in Nigeria are expected to communicate with the NRS on the collection of VAT. However, the NRS will first be required to collect VAT.
To qualify for registration, the NRS is required if, within 12 consecutive months immediately before the coming into effect of the guidelines or any 12 consecutive months thereafter, it has made or expects to make a single supply or series of supplies to Nigeria which (in aggregate value) amount to USD 25,000 (or its equivalent in other currencies) and meet any of the following conditions:
- the supplies are made by the NRS, through digital means, to a person in Nigeria from a location outside Nigeria; and
- the supplies are delivered to, consumed or otherwise utilized in Nigeria.
Upon registration, an NRS will be required to file monthly VAT returns, even for months in which no taxable supply has been made to Nigeria, no later than 21 days after the end of the month in which the supplies were made.
The services covered under the guidelines include (but are not limited to):
- streaming, downloading or obtaining/providing?? access to digital content, including films, music, e-books, magazines, news, applications, games, library services or similar services;
- online gaming;
- online ticketing, excluding international air travels and freight charges;
- online betting services;
- online intermediation platform services, including online marketplaces, payment platforms, ride hailing platforms, travel and accommodation booking, rental services or similar services;
- online advertising services;
- subscription-based social media platforms, including video conferencing applications, instant messaging, chats, dating, image/video sharing or similar services;
- standardized online education services such as e-learning, webinars or similar services;
- cloud computing services, including cloud storage services;
- auction services;
- automated online professional and consultancy services;
- online stores; and
- e-library services.
If the NRS has failed to account for or remit VAT or comply with the guidelines, the FIRS will take all necessary steps to recover the amount due and obtain restitution. Also, the FIRS may use the mutual administrative assistance in tax collection instrument, as appropriate, to collect the tax and do all such things as may be necessary for it to enforce the tax laws and collect the taxes due.
The guidelines were issued on 11 October 2021.